Trials Of A Citrus Co-op After Killer Freezes, Golden Gem Looks South To Ensure Its Survival

June 2, 1986|By Adam Yeomans of The Sentinel Staff

UMATILLA — Jack Nelson, executive vice president and general manager of Golden Gem Growers Inc., sits in the back seat as the car pulls out of the cooperative's packing and concentrate plant in Lake County.

It's no surprise Nelson might worry about black cats or other signs of ill fortune, given the amount of bad luck Florida's citrus industry has experienced in recent years.

Killer freezes in December 1983 and January 1985 left their mark on Central Florida citrus cooperatives as have the canker threat, the flood of Brazilian citrus concentrate into the United States and the fluctuating price of fresh citrus.

The 250-member Plymouth Citrus Growers Association, which was formed in 1909, went out of business in mid-1984 in Orange County. The 76-year-old Brooksville Citrus Growers Association in Hernando County shut down in June 1985. The 60-member Apshawa Grove Inc. in Clermont shut down last summer, after 51 years in business. Although it remains in business, the Umatilla Citrus Growers Association plans to sell its packinghouse and abandon its grove service.

During his speech to Golden Gem stockholders last November, Nelson tried to dispel rumors that the 39-year-old cooperative would meet the same fate as some of its competitors. Formed in 1947, Golden Gem is one of the country's largest grower-owned citrus cooperatives with more than 450 members today.

''Those who are projecting doom for your cooperative simply do not know the facts,'' Nelson told stockholders. ''I am the first to admit that the past two years have been extremely tough. But these are behind us.''

The killer freezes destroyed about 90 percent of the 27,000 acres of grove, located primarily in the northern Citrus Belt, belonging to co-op members and harvested by Golden Gem. Last year, the cooperative spent $200,000 alone to ship fruit from southern groves to the processing plant and packinghouse in Umatilla.

To keep its packinghouse operating, Golden Gem paid cash for fresh fruit from southern grove owners following the freezes. The volume of fresh fruit still declined by 32 percent, and paying for citrus on the cash market caused serious shortages in the co-op's working capital, which is the excess of assets over liabilities. The cooperative lost money on its fruit purchases when the price of citrus tumbled last year.

To reduce the cost it paid for fresh citrus, Golden Gem started seeking members in South Florida, a move it started in the mid-1970s but stepped up dramatically last year.

During the past year, the cooperative added 16,000 grove acres and 166 grower members in South Florida, said Phil Conant, Golden Gem's director of the grower division. The cooperative also has operated a packinghouse in Lehigh Acres since late 1983.

''We wanted them to know we were making a commitment to southern growers,'' Conant said.

This year, the cooperative handles 16,000 acres in 27 counties compared with 27,000 acres in 19 counties three years ago, Conant said. The cooperative hopes to add 10,000 acres in South Florida by 1987 to offset the groves destroyed in north Central Florida, he said.

Golden Gem also plans to raise $6.5 million from the sale of its 1,000-acre River Gem Grove in St. Lucie County. The cooperative already has sold part of River Gem for $1.2 million and hopes to complete the grove sale by Aug. 31, Conant said.

More than $4 million from the sale will pay off a mortgage for the grove with the Columbia Bank for Cooperatives, an arm of the Farm Credit System. About $2 million will go to rejuvenate the co-op's working capital reserve, Conant said.

In a joint venture approved by the cooperative's board of directors in April, grower members who have no producing groves will help maintain the volume of fruit processed at the cooperative.

A group of 14 members has given the cooperative $500,000 in cash to use in purchasing fresh fruit on the cash market, Nelson said. Because the members are acquiring the fruit through Golden Gem, they will be at risk for loss on the purchase, Nelson said.

''What we have are a few member growers with no fruit, but they feel so strongly about Golden Gem that they want to put up the money,'' Nelson said. ''They are willing to take the risk.''

Golden Gem, Citrus World in Lake Wales and the Winter Garden Citrus Products Cooperative are the major grower cooperatives remaining in Florida, Conant said.

In addition, major corporations such as Beatrice Foods Inc. and Proctor & Gamble have bought large processing plants since the 1983 freeze, he said. Coca Cola Foods Division Inc. also operates processing plants in Leesburg and Auburndale.